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Let's get your earnings and go to GM. So, regardless of the quarter, they pulled their guidance and moved their earnings call to Thursday. They also froze their share buy back, all on issues surrounding tariffs. David Welsh's Bloomberg Detroit Brio Chief to recap some of those earnings, David, why did they push their call forty eight hours?
What are they going to learn in those two days?
As they were preparing last night for today's earnings call, there were reports coming out from US and others that the Trump administration would relax some of the auto tariffs, but there's no detail in there. There's some out there that they won't stack metals tariffs on top of auto tariff, for example, and there could be some relief on parts, but until automakers look at the details and see exactly what they're going to have to pay and what they
won't be paying. It's hard for them to forecast earnings and sales and look, they have all kinds of ways to try to plan for tariffs and mitigate them and also model out the impact on the business, and they can't do any of that until they know exactly what
it's going to say. So I think what GM did is they looked at this and they just said, hey, the guidance that they had given out did not count really for any kind of major tariff scheme here, despite the fact that Trump and campaign on it and said he was going to levy them. They gave guidance that had nothing to do with those tariffs. I think probably the tariffs are bigger than GM thought, much more aggressive than GM thought. So they've withdrawn the guidance and they
had a six billion dollar share buyback. Two of it's already funded and will be done in the second quarter. The other four billions on hold again until they can understand what the tariffs will mean for their profits and their cash flow. So this is all about finding out what the details are, trying to model and plan the business going forward, and they just don't feel they can do it right now.
What are GM and some of the other auto manufacturers doing now, David, in terms of are they making any changes to production, to sales incentives or is it just business as usual? As they try to figure out what's going.
On, there are small changes here and there. It's really difficult to change production or change your parts. I mean, you can't do that overnight.
You can't.
It can take a year to do that, let alone. We've been at this for a couple of months. But the one thing General Motors has done so they have four pickup truck plants. It's their highest volume vehicle that the Chevrolet Silverado and gmcc Era. Two of the plants are in the US, ones in Canada, ones in Mexico. Of course, those vehicles coming from Canada Mexico are subject to tariffs at least on the parts, the nine US
parts inside them, and that's pretty substantial. So what GM has done there is they've jacked up production at their four Wayne, Indiana plant to get more pickups out of there. They've just increased when they were already running three shifts, but they've increased the line speed, so they're working at faster to get more vehicles out. It'll add about fifty thousand trucks a year, and that's one way to offset tariff production of trucks and sell American made vehicles. And
you're seeing stuff like that. You know, I think some companies may be slowing production of some vehicles that have tariffs on them because they either can't pass the cost on to consumers or it's no longer as profitable to sell so many of them. So you may be seeing some of that stuff, but a lot of it's been business as usual, but you're seeing some small moves like GM has made really.
Interested to hear that that call on Thursday, David, Thanks so much.
David Welsh, Bloomberg, Detroit via Chief Joining us there.
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All right, let's add to can Now you have Mark Carney's edge slips as Canada's election comes to a hectic end. He won yet by a very very very thin margin. David Gerr's correspondent for Bloomberg, host a Big Take podcast I should say to his party one, but walk us through the results.
What we know.
Yeah, an incredibly close race. So Mark Carney emerges here with the mandate, but it is not a majority mandate, which is what he and his party wanted. So what that means an effect, is in the coming days, he's going to have to figure out how he's going to work with other political parties in this country to pass his ambitious legislative agenda, so much of which centers on the economic predicament this country is in, and of course
the trade this country's engaged with the US on. And so what Mark Carney said over the course of this campaign is he intends to win that trade war. He intends to go to Washington present himself in a meeting with President Trump as somebody who's not going to back down on Canada's position in that trade war. That's what we're going to be watching for here in the coming days. One effect that that meeting takes place again, it's something that he promised would happen in shorter We'll see if
that's in days or weeks. But two things sort of up ended the course of this race over the last couple of months. The first of which, of course is Mark Arney becoming the leader of the Liberal Party. The second of which was Donald Trump returned into the White House in Washington and attacking this country really on two fronts, one on the side of trade in the economy, the other,
of course, on the country's sovereignty. And Mark Karney has said from the get go here he never found those remarks from President Trump about Canada becoming the fifty first state as any kind of a joke. He took it seriously, and that is something he said over and over again, Alex and Paul is not negotiable.
So talk to us about conservatism in Canada. Is it as vibrant as it is in the United States, as it is in some European countries like Germany. Is it to the point where anybody in Canada will be okay with being referred to as a fifty first state.
That is definitely not the case. But you bring up a really interesting question that is where does the Conservative Party in this country go from here? So Peer PAULIV, the leader of the Conservative Party, who is in effect running against Mark Karney, actually lost his seat last night in a district just about thirty or forty five minutes from where I'm standing, So that kind of throws things up in the air in terms of will he continue
to lead the Conservative Party. Is there going to be a situation in which he can kind of convince somebody else in the party who was elected to step down so that he could run in a by election for that seat. That's all up in the air here, and you ask just kind of about the breed of conservatism that we see here. Peer Polyev is somebody who has been compared in terms of political style to Donald Trump,
the president of the United States. If there's make America great again in the United States, there's make Canada grade again here in Canada, as sort of headlined by Peer Polyev. So they had an amazing showing yesterday. By all kind of historical records, they did extremely well, if they still didn't best the Liberals, And that's really extraordinary again when you look at kind of the not so long ago history.
Just a few months ago, before Mark Carney entered this race, the Conservatives had a twenty plus point lead over the Liberal Party and that was squandered here over the last few months. So there'll be a lot of soul searching. Paul and alex within the party about what went wrong and what the party can do differently going forward.
So your's an insanely unfair question, considering that your reporter. So you know, I'll take this for the grand salt. But if President Trump had not come aggressively after Canada, either in terms of tariffs or more importantly making it a fifty first state, would this election have been different? Were there other issues that got kind of sidelined at this point?
I think no doubt the fact that Donald Trump talked about Canada as much as he did and made those threats with something that Mark Karney, who is a career technocrat he headed the Bank of Canada and the Bank of England for a time, to serve as the chair
of bloomberg Ingk's board and Brookfield Asset Management. This gave him an opening to present himself as kind of a foil to Donald Trump, to be a foil to that kind of breed of populism that we've seen in the president of the United States, and it really changed the polling,
changed Canadian's engagement with this election. So yes, as that soul searching takes place among the Conservative Party, I think there's also an awareness of the fact that this is a very unique circumstance and the Canadians, as a result of what Donald Trump said and did, really kind of galvanized the electorate here in Canada in a way that they might not have three four five months ago.
David, you've been up in Ottawa for a few days now, what's the feeling of the person on the street here, because as it relates to their relationship with the US, because I don't think I've ever come across anybody in my life that has anything negative to say about Canada. But you know, so, I'm not sure how how President's comments, how reflective they are of US folks, But how did the people in Canada feel?
Just as Mark Carney didn't find the comments from the President about the fifty first state as a joke, nobody with whom I've spoken has found them funny as well, So they've taken it as a real serious threat also, And there's a sensus you talk to people here as I have over the last few days, of just kind of bewilderment why the circumstances are that the way they are.
They listened to President Trump, they listened to that rhetoric, and they wonder sort of how they got here in light of what you're talking about, Paul, which is this is an allyship. This is a partnership that's existed for a couple centuries now, a very happy and important allyship of two nations.
And to see it.
Kind of changed in fundamentally in the way that it has been over the last few months has really astounded people here. And I'm going back to what the Prime
Minister has said here. We're surprised by that rhetoric to begin with, but they've moved past that, as Mark Karney says, and now they have to kind of plot a new path forward that's going to take place in those negotiations in the White House, but also in just the way that the Liberal Party government here under Mark Karney is looking at the world and kind of rethinking relationships with other countries. And we've seen that over his rather short
prime ministership so far. He's made trips to Europe of course into England as well. He's trying to find new outlets for Canadian products and sort of new arrangements, new relationships for Canada engage in as the US kind of falls.
To the side.
All Right, David really great reporting. Thank you so very much. David Gert. He's the host of Bloomberg a Big Take podcast, also a correspondent for a Bloomberg News.
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So for the broader markets, the question is where are those IPOs? Where's all the M and A. What happens to private markets? We heard that report? Was it over the weekend that Harvard wants to be offloading? Was a Harvard or Yale, I'll fload their private equity slots because they really need the liquidity. Joining us now is Ted Swimmer, head of Capital Markets and Advisory at Citizens Bank. Ted, what's your world like right now?
Like?
What are the concerns? What are the positives?
Well, good morning Alex and good morning Paul. Things have certainly slowed over the last couple of months. From an M and A perspective. As we entered the year, we thought, with lower regulation, potential upbeats and earnings, that we were going to get off to a really good start in M and A, and it started out that way. There was a lot of really good activity going on. But since Liberation Day we've certainly seen things slow down a
little bit. It's hard to find a buyer and a seller who can agree on what the next six months of the year two years look like and therefore get concerned about whether they should ink a deal or not. After saying that it is still very orderly out there, we're not seeing We're still seeing a fair amount of conversations going on. We're still we're still our pipelines a citizens have never been bigger. So there still feels like a lot of activity, a lot of discussions going on.
It just feels like at the moment it's hard to get to a actual final contract on a deal. But it does not feel like the world the ground is crumbling. It still feels like there's activity. We saw a couple of deals get announced last week, so it's not the end of the world, but it's still not as busy as we'd hoped it would be.
Tedday, I know it's Citizens Bank.
You guys Target, and a lot of your clients are middle size businesses and a lot of folks are saying, you know, in the mid to smaller companies, they might feel the tariff impact more than the larger companies, the Amazons of the world, the Ibms of the world. Are you hearing that from your clients that, boy, we're a little bit more. This is going to be an issue.
It's certainly industry specific as we talk about it. I mean, we're in the data center space and they're not all that concerned about tariffs, but certainly those who work with China, we have customers who have drawn on their lines to try to build up inventory pre pre teriff effect. So we've seen some higher loan utilization as a result of that. So yes, we're seeing and feeling some of that, but truly very industry specific on who's having that impact on who isn't.
So what do you make of where the private markets are going to go? I just was mentioning how Yale wants to offload some of their private equity stake in order to get some funding and get liquidity. What are you hearing on that end?
This is a good market for private for private capital, especially on the on the loan side, with the banks backing up a little bit on being able to give certainty on underwriting positions. We're seeing, uh, we're seeing some private capital reverse trends that we saw in the first quarter when the syndicated market was going more banks. Now private capital has a little bit more certainty on their deals, So we're seeing that that impacts the leverage loan market.
What on the offset, it gives banks a lot of a lot of ability to len to the direct lenders, lend to the private capital, do equity issuances, do bond issuances as those markets come back, So it works in both ways. But we're seeing private capital have a really good opportunity to put some loans to work on deals that are more difficult time getting done the syndicated market right now. So there's some good and some bad, I think with everything with what's going on in the market right now.
You know, for my Wall Street days, I remember being taught early early on that MNY activity in large part is based upon confidence and certainty. The more a c suite and a board feels about their business, more confident they feel about the trends in the industry, more aggressive they can be in terms of making a big capital commitment or making a big m and a trade that doesn't seem like the environment we're in today.
Again, it's industry specific, so I would agree with you, Paul. In certain areas where tariffs or policy may have an impact, it seems like the the M and A processes are being delayed a little bit till there's more certainty around what's going on. In other places, we feel very good about people need to transact. What's different about what's going on here than we've seen in a lot of other markets is the loan market, the bomb market are acting orderly.
There's still there. We're not seeing a time where there's not execution of deals. We've seen people go to the bomb market today, we're seeing them go, we saw them go last week. So that we're not in a frozen period of time, and so if you're in an industry where it's not going to be impacted by terraffs, we're still seeing not robust M and A flow by any stretch of the imagination, but we're certainly not seeing us shut down of the market altogether.
What do you think brings back the animal spirits? Like what specifically what we need to see And I know everyone's going to say clarity on tariffs but in theory, like what is that that your clients are like, press.
The go button.
I won't say what you just said not to say, which is clarity.
Everyone's like that, but something more more.
Pots I think as more of this goes on, look there there's still a lot of money sitting on the sidelines, looking to make acquisitions, looking to expand businesses. I think corporates have a decent I mean, we saw Global Payments last week make a very nice acquisition, and so we're seeing some of that still go on in today's market. I think we will continue to see those non tariff
related businesses continue to make acquisitions. The headlines our M and A is down, and that is factually correct, but it is still we are still seeing and feeling conversations going on in a lot of different industries, which I don't think it's going to take a lot to bring those deals to completion and continue to build some momentum
into the M and A markets. I think they are going to be certain industries we won't see things happen for six months to a year or maybe longer, but I don't know that that's going to impact the whole M and A market like it did in during COVID, or it did in twenty twenty three right after the banks filed, or it did out in the Great Recession. I think we're in a different market and we're feeling
different things right now. Again, we've seen transactions getting get announced even last week during all the noise that was going on about.
The IPO market. Let's look at one stub hub. You guys are named a co manager on that deal. That seems like a deal that would walk out the door. Give us talk to us about stuff up as just emblematic of what's happening in the IO.
I think you need in the IPO market to really take off. That's where you really need confidence and you need consistency. There are a couple of insurance deals that we hope to get announced shortly that we think would be another area that we could see the I P O markets start to pick up. But it's still very tough to test the markets right now with the fear that you know, something in the middle of your your your issue, your issuance day, would would hurt creater the stock.
So there's a lot there on the siland is there a lot there ready to go? Stub Hub is a good example of something that may go could go. I don't have no even.
Maybe going could be going for how long.
Now, But there are industries that are not going to be impacted like this that I think you will see as soon as there's a little more stability in the market, tests the markets and bring the markets out all.
Right, Ted, really appreciate it. Thank you for coming in.
Also great to see you, Ted Swimmer, head of Capital Markets and Advisory at Citizens Bank, joining us in capital markets, IPO private, all the good stuff.
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If you listen to this programming, know Alex and I really like to stay on top of the commercial real estate business, certainly one of the businesses that was impacted dramatically by COVID and in denounce long long recovery. Here now in the midst of higher interest rates. Today we're going to check out with Ben Miller, CEO of fund Rise, joining us Washington, DC via zoom. Ben, I think when you look at the stock market, the bond mark, at the commodity markets.
You know, the.
Common word is probably just uncertainty out there, volatility out there. How about the commercial real estate market? What's the last three months been in that space?
The irony for real estate is bad news is good news because interest rates have been higher for longer, for the last few years, that's been weighing on real estate, especially commercial real estate, and so anything that brings down rates is going to be a boon for commercial real estate owners. And so uncertainty, tariffs, recession, those are all great, great words for real estate industry.
So where so that driven primarily by lower rates? I get that, Where do you think the best opportunities are here in commercial real estate?
Well, so, the functional effect of tariffs is that it makes existing assets worth more. So my analogy is always if I had one thousand cars on my lot, If I was a dealer car dealer, and I had a thousand cars on my lot, put a fifty percent tariffs on all new cars, right, all those existing cars, all the car inventory on my lots across the country be
worth more because the price just went up. And so all the existing inventory of apartments and other assets are going to be worth a lot more with tariffs, and so it's a tax on flow and as a gift to stock, if you know what I mean.
But what about the volatility? So rates are one thing, stock is another.
But the volatility and uncertainty, how does that affect sentiment in your market?
Yeah?
I mean real estate is a much slower moving asset. It's it doesn't trade very often. People don't reorder their leases very often, so it's much more It has much more installation from volatility. I mean, because you can't really trade it. That volatility doesn't matter as much as it does for stocks or bonds.
But if the uncertainty, not necessarily the terifts per se, but at the uncertainty push it or slows this economy ramatically, maybe even pushes us into a recession.
That can't be good for real estate. Well, it depends on the kind of real estate you mean. So office, which has already been hit by work from home, is very pro cyclical, so people only expand office space and new leases when the economy's hot. The economy's cold, office is going to get hit again. I think office could go from bad to worse. But consumer staples like food groceries. Housing,
you've got to live somewhere, you gotta eat something. Those actually end up doing pretty well in a recession, and so multi family housing I think will really outperform. And low rates rates matter a lot more than the economy, and so if rates come down like I think they will, it's going to be a win for most commercial estate.
Yeah, and then in terms of construction and new building and materials like either that's going to get a lot more expensive or as we're talking about, that's going to get a lot tighter, which then if you own already those buildings, that's better.
Right.
What are you seeing right now currently?
Right?
I mean, there was a absolute housing boom in twenty twenty one twenty twenty two there because rates were so low and demand was so high, and so we just are working on our way through I think the largest supply of new housing in decades. So that that hit the market last year, it'll be sort of done by the end of this year, and then we'll kind of fall off a cliff and we'll end up with no new construction, high rates, expensive construction costs, tariffs, uncertainty. Bank
lending is still pretty tight. I think we'll see sort of the end of new construction for maybe this decade. And that's again that's great for owners and maybe bad for renters.
Ben talk to us about Florida. It's been a market that really just goes up and down. It's had such a multi year growth spurt coming out of the pandemic. What's the state of the Florida I don't know the apartment market any of that kind of stuff.
Yeah, I mean Florida I got hit by a climate change too. I mean it was a really big hit on insurance costs. It caused a lot of owners to have second thoughts. The short term effect of a lot of new supply in the market and insurance costs hit Texas to Texas had a lot of challenges. So those two markets have sort of the most growth and had the most negatives. And in the short term, I think Florida really, you know, doesn't doesn't look as good as some of the other parts of the of the Sun Belt,
like you know, North Carolina, South Carolina, Georgia. But in the more medium term, Florida and Texas just gets so much more population growth in any other state. I mean, some between the two of them that get over a million people a year moving there, and over that like three to five year period between migration and population growth. I think that Florida and Texas will be just fine, But in the short term is not that pretty all right.
Well, we appreciate the update. Let's keep talking and see kind of how this all evolves. Ben Miller, co founder and CEO at fund Rise, on the state of commercial illstate.
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